A-Level经济真题每期一练

今日知识点：Oligopoly Collusion vs. self-interest

例题

Question: Oligopoly Collusion vs. self-interest

Duopoly outcome with collusion:
Each firm agrees to produce Q = 30, earns profit = $900.

If T-Mobile reneges on the agreement and produces Q = 40, what happens to the market price?  T-Mobile’s profits? 

Is it in T-Mobile’s interest to renege on the agreement? 

If both firms renege and produce Q = 40, determine each firm’s profits.

解析

If each firm produces Q = 40, then each firm’s profit = $800.

If T-Mobile increases output to Q = 50: Market quantity = 90, P = $25

T-Mobile’s profit = 50 x ($25 – 10) = $750

T-Mobile’s profits are higher at Q = 40 than at Q = 50.

The same is true for Verizon.

下面我们为大家准备了一道同类型的题目，请大家一起来试试解答。

Question: The “fare wars” game

The players:  American Airlines and United Airlines

The choice:  cut fares by 50% or leave fares alone

• If both airlines cut fares, 
        each airline’s profit = $400 million

• If neither airline cuts fares,       
        each airline’s profit = $600 million

• If only one airline cuts its       fares, 
        its profit = $800 million
        the other airline’s profits = $200 million

Draw the payoff matrix, find the Nash equilibrium.

Correct Answer：